Employers who sponsor self-insured (or level funded) group health plans must report and pay the required PCORI fees annually via IRS Form 720 (Instructions). It must be paid by July 31 of the calendar year immediately following the last day of the plan year to which the fee applies.
For plan years that ended in 2023 but before October 1, 2023, the fee is $3.00 multiplied by the average number of lives covered under the plan. For plan years that ended between October 1, 2023, and December 31, 2023, the fee is $3.22 multiplied by the average number of lives covered under the plan.
The PCORI fee is based on the number of employees, spouses, and dependents that are covered by the plan. Employers may use the actual count method, snapshot method, or Form 5500 method to determine the average number of covered lives. More information on calculation methods can be found here.
Medical Plans
Self-Funded (or Level Funded) plans: Employers with these types of plans are responsible for filing and paying PCORI fees annually.
Fully Insured plans: Employers with fully insured group health plans do not pay PCORI fees directly since they are already assessed this fee in their monthly premium payments by their health insurance carriers.
If you don’t sponsor a self-insured (or level funded) medical plan, but you offer an FSA or HRA (and it is not excepted) then PCORI fees apply to you as well. See below.
Flexible Savings Accounts
Most health flexible spending arrangements (FSA) are considered “excepted” benefits and are excluded from PCORI fees as long as the employer also offers traditional medical coverage to FSA participants and the maximum annual FSA reimbursement is limited to the greater of the participant’s contribution plus $500 or twice the participant’s contribution.
Health Reimbursement Accounts
The employer should look to the integrated group health plan to determine reporting requirements.
Integrated With Fully Insured Coverage: The employer must pay the PCORI fee for the self-insured HRA, calculated by counting one covered life for each employee with an HRA while the insurer pays the PCORI fee on the individuals (including dependents) covered under the insured plan.
Integrated With Self-Insured Coverage: Count each individual covered by both plans only once. Add to this any individuals covered by only one plan using the counting method used for other individuals in that plan.
An HRA is an excepted benefit if it only reimburses for limited-scope dental and vision expenses or long-term care coverage and is not integrated with a group health plan.
Other Plans
Health Savings Accounts (HSA) are not subject to the PCORI fee requirements since HSAs are not group health plans, but rather individual accounts. The PCORI fee also does not apply to most dental and vision coverage since they are “excepted benefits,” exempt from PCORI fee requirements.
Kristin Young, JD, PHR, SHRM-CP | Operations and Compliance Manager
